The Tax Publishers2020 TaxPub(DT) 4756 (Bang-Trib)

INCOME TAX ACT, 1961

Section 32(1)

Though assessee-company did not generate revenue from the hotel business, however, unless and until the assessee was ceased to exist, the assessee was entitled for depreciation on assets which was included in block of assets, especially when AO himself had allowed maintenance of car expenditure.

Depreciation - Allowability - No revenue earned by assessee-company from existing business -

Assessee-company engaged in hotel business claimed depreciation on Motor Car. AO disallowed assessee's claim on the ground that assessee did not generate revenue from the hotel business.Held: Assessee company was in existence under Companies Act and it had to fulfill various statutory compliances and it was not disputed that assessee was earning income from F & O business and other sources and the same was offered for tax. For granting depreciation, it was not mandatory for assessee to have revenue from hotel business. Unless and until the assessee was ceased to exist, the assessee was entitled for depreciation on assets which was included in block of assets, especially when AO himself had allowed maintenance of car expenditure. Therefore, disallowance of depreciation on Motor Car was not correct.

Followed:CIT v. Kriti Resorts (P) Ltd. (2011) 243 CTR 341 (HL-HC) : 2011 TaxPub(DT) 1656 (HP-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2016-17



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